3-1-19 updated NLST DD and conference call info from 2-27-19 earnings call.
The financials:
Very positive all around, the most important thing was that Cash on hand was $16.7 million down from $19.4 million resulting in a $2.7 million cash burn which was almost all due to legal fees. Without getting deep in the numbers and what matters and what doesn't I'll just say the fact that minus lawsuits they are almost profitable is a big deal for the future and the valuation of the company. Great financial results.
The Litigation:
-Google:
Although I have already pointed out the importance of the PTAB win against google and the the importance of the '295 being thrown out against Smart Modular the CEO outright publicly stated the same thing. Google lost all arguments for reexamination and rehearing and there only three options are settlement, the court deciding damages, or a CaFC appeal which would have no hope (As the CEO stated his lawyers said on the call).
-SK Hynix:
We already knew the importance of the favorable claims construction and dismissal of summary determination, trial is March 11th-15th with verdict by June 14th. But the CEO reiterated all this on the call.
My conclusion:
The conference call gave me a new outlook on litigation and the position of the company. At the current rate of cash burn with the current amount of litigation, NLST can survive for another 6+ quarters (yeah and a half) without raising funds and that is if they don't increase revenue and decrease legal fees. So they are in no hurry to settle a decade long court case for pennies on the dollar with Google, SK Hynix, or any other company.
IMO, the Google case will go back to the judge to decide damages in April (because google wont appeal to CaFC). SK Hynix will go to trial and will not be settled until a verdict is issued issued in June. All other infringers will be sidelined until these rulings as they determine the validity and necessity of damages and licenses so until they are ruled on nobody is going to fork over any dough.
I believe Google has absolutely no chance at all of winning an appeal in CaFC and we will receive damages in the coming months, and with SK Hynix I believe the odds are stacked heavily in our favor but it is not a sure thing.
I also believe the future is very bright and Netlist will be profitable in 2019, and will receive a large amount of money (100's of millions) from google to be conservative.
The downside is I do not believe anything will happen before April for Google or June for SK so it's a waiting game now. Place your bets and trade accordingly. GL
